Missouri operators comply with new packaging rules amid marijuana recalls

Missouri cannabis brands, manufacturers and retailers are adjusting to plain packaging rules enacted this month, adding to concerns about potential inventory shortages fueled by a statewide product recall.

Though licensed operators have had months to meet the latest marketing requirements, which went into effect Sept. 1, compliance challenges persist, industry sources told MJBizDaily.

Many licensed operators also are bracing for a widespread fire sale affecting thousands of products packaged under the previous set of rules as a key regulatory deadline looms.

The latest packaging guidelines include:

• A requirement of only one primary color.
• An allowance of two logos or symbols in different colors.
• Mandatory design approval from the Missouri Division of Cannabis Regulation, a process that takes roughly 60 days.

“This regulation ensures the health and safety information is the focus of the packaging,” Missouri Department of Health and Senior Services (DHSS) spokesperson Lisa Cox told MJBizDaily via email, adding that the new rules are meant to diminish the appeal of intoxicating products to children.

Gabe Parton Lee, general counsel for Oregon-based edibles maker Wyld, said the new requirements are more restrictive than the legislation approved by voters in November 2022.

“This is an adult-use program imposing pharmaceutical-type standards without consistent application, rapid responses or clear guidelines,” Parton Lee said.

Missouri Amendment 3, which legalized adult-use marijuana, included requirements to clearly identify intoxicating products, mandate child-resistant packaging and prohibit brands from marketing to children, among other stipulations.

Missouri is the latest state to implement plain-packaging rules, joining others such as Connecticut, Florida and Massachusetts.

Small business impact

The new regulations are affecting smaller operators more acutely, industry sources tell MJBizDaily.

Oregon-based Grön, an edibles maker that sells its infused marijuana products in Missouri and several other markets, is a prime example.

“While I fully support our Missouri regulators and their decision-making, I understand the potential challenges this poses for smaller, independent businesses,” said Christine Apple, founder and CEO of the Portland, Oregon-based company.

“For many, the financial burden of discarding old packaging – sometime worth tens, if not hundreds of thousands of dollars – could have a significant impact.

“It certainly has for us.”

Mint Cannabis, which operates a dispensary in the St. Louis suburb of St. Peters, near the Illinois border, has noticed a slight drop in product availability among certain brands recently.

“As always, the smaller brands are the ones that have the hardest time pivoting,” said Raul Molina, Mint’s co-founder and chief operating officer.

Inventory check

According to the latest data from from New York-based cannabis wholesale platform LeafLink, the number of stock keeping units (SKUs) at Missouri retailers has dropped significantly in the past month.

The number of SKUs sold weekly though LeafLink’s online marketplace dipped from 4,200 through most of the summer to nearly 3,400 in late August and early September, a 20% decrease.

Despite the dip, wholesale transactions and volume are holding steady.

“Brands are rationalizing SKUs due to the new recall notices and changes to packaging rules, but it hasn’t widely impacted unit pricing or wholesale volumes on our platform,” according to Ben Burstein, corporate development manager LeafLink.

Massive cannabis recall

Identifying the cause of inventory shortfalls in Missouri’s regulated marijuana market is more challenging.

About a month ago, the Missouri Division of Cannabis Regulation issued a series of recalls for more than 132,000 marijuana products; the recall orders collectively are believed to represent the largest recall in any regulated marijuana market.

According to regulators, the recalls primarily were tied to three operators and involved non-compliant lab testing and improper product tracking in the state-mandated Metrc system.

Molina said product quarantines have influenced inventory levels more than shifting regulations, but deliveries are falling behind due to the new packaging guidelines.

The latest batch of quarantines marks Missouri’s second large recall in the past year.

One year ago, MJBizDaily chronicled a statewide recall affecting roughly 62,000 infused cannabis products manufactured by Delta Extraction and sold to manufacturers and retailers across the state.

The recalls – also tied to products that “were not compliantly” logged – led regulators to revoke Delta Extraction’s manufacturing license and triggered inventory shortages across the state, costing operators millions in lost sales.

Regulatory approval

Retail SKUs and product availability could be jeopardized as operators await state approvals on redesigned, compliant packaging.

Cox told MJBizDaily that state regulators are processing packaging applications within 60 days.

According to DHSS data, more than 64,000 such applications were under review as of last week.

The agency has approved more than 58,000 packaging applications – or roughly 39% of the 149,974 applications filed since Sept. 1, 2023, when the approval window opened.

Several state operators reported challenges related to packaging requirements following the launch of adult-use marijuana sales in February 2023.

MJBizDaily reported in January that a backlog of hundreds of products awaiting packaging approval from regulators delayed some operators from entering the market for months.

Fire sale?

Under the new rules, all products packaged under previous guidelines must be removed from retail shelves by Nov. 1.

John Mueller, CEO of Greenlight Dispensary, Missouri’s largest retail chain, estimates about 20% of marijuana products currently in the market will have to be sold or removed by the deadline, meaning consumers can expect to see discounts in the coming weeks.

“We believe there will be some portion of a fire sale coming up – prior to Nov. 1, if that deadline is not adjusted,” Mueller said.

“Maybe 5% of our products will have an issue at that point.”

Since the new guidelines were issued more than a year ago – and regulators have extended the deadline several times since then, including in late March – operators should not expect any more relief, according to Cox from DHSS.

“Licensees have had a year to submit applications for approval and five months’ notice that they should not expect another extension,” she said.

Chris Casacchia can be reached at chris.casacchia@mjbizdaily.com.